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July 14, 2021 - Eduardo Guraieb

How to use Artificial Intelligence to Stop Card Not Present Fraud

At the height of the pandemic, online shopping sharply increased to include 36% of consumers compared to 29% just a few months prior. US consumers spent over $861 billion online with US merchants in 2020, which represents an astounding 44% growth compared to 2019. This is a new record by all measures. 

Unsurprisingly, this increased interest in digital shopping also influenced a rise in Card Not Present fraud (also called CNP fraud). Fighting CNP fraud is a tough battle, but it’s one that merchants can win with the right solutions. 

Why CNP Fraud is More Prevalent than CP Fraud

Many consumers are quick to notice a credit card missing from their wallet. But Card Not Present fraud is so prevalent because many victims don’t realize their data has been stolen. 

Furthermore, CNP fraud only requires the criminal to have the credit card information, not the physical credit card. That’s why online channels have proven to be so lucrative for unlawful activity: anonymity reigns and physical credit cards aren’t necessary. 

In one panel discussion, DataVisor revealed that CNP fraud is up 40% since the adoption of EMV chips in credit cards. Account takeovers are also on the rise, leading to more data being compromised. This is because EMV chips made card-present fraud much more complicated, so fraudsters focused their criminal activity on CNP transactions instead. 

When these types of online attacks are conducted on a large scale using automation tools, many fraudulent transactions can occur in quick succession. And since processing payments quickly is seen by merchants as a requirement for good customer service, the key to stopping CNP fraud lies in better transaction fraud detection measures that don’t inhibit the customer experience.

Best Practices to Protect Merchants

Merchants and credit card issuers bear the liability when CNP fraud occurs. The former must process complaints from their cardholders and the latter often bear the costs of chargebacks and potential losses related to shipped goods and delivered services. In total, CNP fraud costs merchants an estimated $3.36 for every $1 of direct fraud loss.

Merchants are faced with the seemingly perennial debate of allowing quick and easy transactions at the expense of increasing their “fraud tolerance”. But this needn’t be so. The key to stopping CNP fraud lies in the use of more intelligent detection measures that don’t hinder the customer experience. 

The Status Quo

Existing transaction fraud detection solutions fall short of serving your needs for a number of reasons, including:

  • Increased customer friction
  • Data spread out over disparate systems
  • Too many false positives
  • Difficulty in finding, hiring, and training human resources for manual reviews

Merchants should consider using a multifactor authentication method to add an extra layer of verification to every transaction. Additionally, biometric scanning can be used to confirm a shopper’s identity and tokenization can be leveraged to prevent data theft by using a one-time digital “token” as an identifier rather than storing permanent account numbers or data. 

However, finding a transaction fraud prevention solution that can address each of the shortcomings of legacy vendors is the best path forward.

How DataVisor Stops CNP Fraud in Real Time

When it comes to holistic transaction fraud prevention, DataVisor fills in the gaps left behind by existing fraud solutions. 

Our software is the most comprehensive AI-powered fraud and risk platform. AI reviews millions of data points in real time to detect suspicious activity across any device and channel. Merchants have detected fraudsters hours (if not days) before they attack and have reduced transaction damage by over 30%

DataVisor protects transactions in real time, even CNP transactions, all while scaling infinitely to adapt quickly to fast-evolving attacks. With real-time knowledge, organizations can make faster, more accurate decisions and reduce customer friction, all while using fewer human resources. 

See how DataVisor stops transaction fraud in real time; get a demo today.

Photo of Eduardo Guraieb
about Eduardo Guraieb
Eduardo is a Product Marketing Manager at DataVisor with experience working with fintech startups and top-tier international financial institutions. Eduardo is passionate about marketing, financial inclusion, coffee, and bicycles. He holds a law degree from the Technological Institute of Mexico (ITAM) and an MBA from Berkeley Haas.
Photo of Eduardo Guraieb
about Eduardo Guraieb
Eduardo is a Product Marketing Manager at DataVisor with experience working with fintech startups and top-tier international financial institutions. Eduardo is passionate about marketing, financial inclusion, coffee, and bicycles. He holds a law degree from the Technological Institute of Mexico (ITAM) and an MBA from Berkeley Haas.